Deloitte caught in Standard Chartered scandal – The US arm of Deloitte has been implicated in a scandal involving Standard Chartered Bank (SCB), which is facing allegations that it schemed with Iran to launder billions of dollars.

The bank is accused of devising a method of masking Iranian client transactions to bypass US money laundering defences and watered down an independent report into the bank’s practices.

The New York State Department of Financial Services’ order found the bank’s actions left the US financial system “vulnerable to terrorists, weapons dealers, drugs kingpins and corrupt regimes”, in which £160bn was hidden from US regulators between 2001 and 2010. The report also alleges that Standard Chartered was helped by its accountants Deloitte.

http://www.dfs.ny.gov/banking/ea120806.pdf

The department said: “SCB carefully planned its deception and was apparently aided by its consultant Deloitte & Touche, which intentionally omitted critical information in its ‘independent report’ to regulators.”

Deloitte’s report was part of a written agreement between Standard Chartered’s New York branch and banking regulators, following separate compliance failures at the bank.

The firm denied the allegations in the following statement: “Deloitte Financial Advisory Services performed its role as independent consultant properly and had no knowledge of any alleged misconduct by bank employees. Allegations otherwise are unsupported by the facts.”

Deloitte is also alleged to have unlawfully provided Standard Chartered with confidential historical transaction review reports that it had prepared for two other foreign banking clients that were under investigation for money laundering.

The order goes into detail how Deloitte was involved:

“Having improperly gleaned insights into the regulators’ concerns and strategies for investigating U-Turn-related misconduct, SCB asked D&T to delete from its draft “independent” report any reference to certain types of payments that could ultimately reveal SCB’s Iranian U-Turn practices. In an email discussing D&T’s draft, a D&T partner admitted that “we agreed” to SCB’s request because “this is too much and too politically sensitive for both SCB and Deloitte. That is why I drafted the watered-down version.”

US accounting tabloid GoingConcern.com http://goingconcern.com/post/deloitte-managed-get-entangled-big-international-money-laundering-scheme-allegedly said this could prove to be a very unfortunate statement. According to the footnotes of the order, the Deloitte partner in question was the “Global Leader of Anti-Money Laundering/Trade Sanctions Division” and this was written “to SCB’s Head of Compliance, Project Manager for the Lookback Review, Compliance Officer and a Manager from Deloitte and Touche dated October 8, 2005.”

Standard Chartered also denied the position in the department’s order and said in a statement: “The group strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS.”

It has also been suggested in the report that the allegations could extend to more countries: “The Department’s initial focus is on SCB’s apparent systematic misconduct on behalf of Iranian clients. However, the Department’s review has uncovered evidence with respect to what are apparently similar SCB schemes to conduct business with other US sanctioned countries, such as Libya, Burma and Sudan. Investigation of these additional matters is ongoing.”

http://www.accountingweb.co.uk/article/deloitte-caught-standard-chartered-scandal/530321